국가의 제도적 고립이 자국의 벤처투자 규모에 미치는 영향: 유로화 도입 후 영국의 벤처캐피탈과 스타트업 사례를 중심으로

This paper investigates how the institutional distance between a country and surrounding regions affects the size of Venture Capital(VC) investment of the domestic country. Whether two different economies share a similar institution or not affects the transaction cost of economic transactions including trades and cross-sectional investment. The stark increase of the transaction costs led by a sudden institutional disparity, thus, may harm the incentives of investors or dampen the prospect of a local economy, thereby contracting the size of the local VC market momentarily. Unlike the last a few decades in which globalization has been facilitated with institutional isomorphism across various regions, the recent trend clearly shows the rise of protectionism and nationalism. The political and economic conflicts weaken the institutional coherence among countries and, thus, increase transaction costs and uncertainty related to economic transactions. In the context of the UK in 1999 where the European Union(EU) adopted Euro as the official currency, this paper finds that VCs within the UK significantly decreased the investment size and the British startups raised less amount of funds after the UK decided to use its own currency as opposed to the movement of other major members of EU. The trend did not only appear within the UK, but is also observed among other European countries that didn’t adopt Euro neither. Taken together, the results suggest that a drastic institutional difference between a country and neighboring regions may affect the decisions of private investors, thereby shrinking the size of investment in the domestic entrepreneurial financing market.